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Buy now, pay later: Boom time schemes still costing £135 million a year

A Police Oracle analysis reveals the amount of money being paid to private companies for agreements made by old force leaderships in the years before austerity hit.

Many facilities, including Derbyshire's HQ and West Yorkshire's Carr Gate training centre, were built using the system, but several forces have had to shut police stations due to austerity

Many facilities, including Derbyshire's HQ and West Yorkshire's Carr Gate training centre, were built using the system, but several forces have had to shut police stations due to austerity

Date - 3rd August 2017
By - Ian Weinfass - Police Oracle
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Police forces are paying more than £135 million a year for debt taken out for buildings bought before austerity hit.

An analysis by PoliceOracle.com has found that across 20 forces in England and Wales, some 31 individual private finance initiative (PFI) projects are costing forces an average of £6.6 million each.

While under the last Labour Government use of the schemes was the only way some could invest, they are now left with big bills often based on outdated policing plans.

Private finance initiatives, first introduced under the Major Government, were a means of using private money to invest in public sector projects. They typically involve lengthy contracts which see the investors secure huge returns. 

No new schemes have been created since 2012, meaning that no current chiefs whose forces use them were in post when the contracts were being drawn up.

Defunct police authorities signed-off the deals, which cost £135.3 million in the last financial year. In 2015/16 they cost £134.7 million.

The Treasury estimates that due to the nature of the contracts the costs will continue to rise annually, but the Home Office supplied only £73 million in the latest police grant settlement towards them – exactly the same amount it has for the last three years.

The money invested in the initiatives equates to more than twice the sum given to the Independent Police Complaints Commission. Chiefs have recently started appealing to the government to curb the watchdog’s budget expansion and give it to them instead.

Changing demand

Greater Manchester Police built more premises than any other using the system, and is still paying for 16 police stations commissioned under its former chief constable, the late Mike Todd.

Ian Wiggett, who was assistant chief of GMP until late 2015, told PoliceOracle.com: “The problem was that at that stage GMP was aspiring to have 8,000 cops, then all of a sudden austerity hit and a few years later, in quite a few of these buildings, you didn’t have the people to go into them.

“Now they’re down to 6,000 [officers] and there was a big drop in police staff as well.”

As an example of changing demand, he pointed to Stockport borough where a central police station was closed, and a new one opened on the outskirts of the town, with officers then moving back into council offices in the centre.

But he added: “I was in Cheshire when we did a new HQ, that was a better bit of business as the estate was in a bit of a mess at the time, getting a PFI scheme was the only way to move, and there was a strong business case for it.”

That scheme is forecast to cost £7 million in this financial year.

Most of the deals are subject to extra, sometimes unforeseen, charges for things such as maintenance.

Taking advantage

In his recently released memoir Blue, Met Police Chief Superintendent John Sutherland recalls being charged £90 for a sink plug by a private contractor during his time as Camden borough commander.

He calculated that to be an 8,900 per cent mark-up.

Although the police station mentioned is not one of the Met’s PFI projects, Chief Supt Sutherland adds: “I could tell you endless tales of the same sort: hundreds of thousands and millions of pounds spent on plugs and things right across policing and beyond.

“I don’t doubt there’s a dose of public sector cluelessness in the negotiation of these contracts. And I suspect that there’s no shortage of switched-on business people waiting to take advantage.”

In 2013 Dorset Police and Crime Commissioner Martyn Underhill publicly lambasted his force’s PFI arrangements as “white elephants”, complaining that an empty custody suite and police station were being paid for to the tune of £2.1 million a year.

He attempted to renegotiate the contracts and called for the government to intervene, failing on both counts.

In 2016/17, the force paid £7.8 million in total PFI contract costs.

Asked about the issue now, a spokesman for Mr Underhill said: “The PCC was unable to renegotiate the contracts he inherited from the police authority, however, changes have been made to better utilise the buildings Dorset Police has across the geography.

“He has asked the questions around re-negotiation but he is not able to change commercial contracts that he inherited. This is the case for police forces nationally.”

Whether forces should adapt to their contracts or the changing nature of policing challenges is a question which could be asked by the public in 20 areas where PFI debts are being paid today.

Success story

One politician had more success than Mr Underhill in abolishing his force’s debt.

In 2015 the then-Dyfed-Powys PCC Christopher Salmon was able to buy out a “stinking bad deal” on the barely used Ammanford Police Station, which was opened in 2001.

He told Police Oracle this week that the building cost £3 million to construct and the force would have ended up paying £21 million for it, with the site eating 20 per cent of Dyfed-Powys' estate budget.

“No sooner had they built the station than the policing model changed and it was the wrong station in the wrong place so it was only partly-used,” he said.

“The problem with PFI contracts is that, in theory, you’re laying all the risk on the private sector and saying ‘here’s a payment that pays my mortgage and the maintenance cost of my house and I don’t have to pay anything for the next 30 years’, but in practice the private sector just prices up the risk and you end up paying an enormous amount for what you get.”

Mr Salmon drafted in specialist consultants, and was able to announce in 2015 that he was saving more than £3 million by ending the contract.

Tim Brain, who was ACPO finance lead and Gloucestershire chief constable in the early part of this century, said that under the previous system his force could have had to wait a decade for Home Office approval, whereas under PFI its new HQ could be built much more quickly.

He said many schemes were sensible and necessary but some may have chosen bad deals.

“For most forces they were the only show in town – if they wanted to get a capital project they had to get PFI,” he added.

Asked whether the increasing cost and level Home Office grant shows that the government is not really protecting police budgets, he replied: “Police budgets aren’t being protected, it’s not true, they do themselves no service by claiming they are [but] PFI costs would always have increased over time so it may be yet another example.”

The NPCC was approached to speak about PFI debt but a spokesman said they were unable to comment.

A Home Office spokesman said: “The government has a duty to honour its long-term contractual commitments and support investments by police forces. There have been no Home Office-backed police PFI schemes since 2012.”

Forces still paying PFI debt
Force Cost in 2016/17 Schemes
Met £29.9m Gravesend training centre and three south east London stations.
GMP £13.9m 16 police stations.
Sussex £11.2m Police custody provision.
Norfolk £10.3m Operations and communications centre and Police Investigation Centres at Martlesham, Bury St Edmunds and Gt Yarmouth.
Avon and Somerset £9.3m Black Rock, Valley Road, Portishead; Keynsham Police Centre, Ashmead Trading Estate, Ashmead Road, Keynsham, Bristol; Patchway Police Centre, Gloucester Road, Bristol; Bridgwater Police Centre, Express Park, Bristol Road, Bridgwater.
Kent £9.1m Medway Police Station and North Kent Police Station.
Dorset £7.8m Western Division HQ + joint fire and police station
Cleveland £6.9m Urlay Nook Tactical Training centre and Custody facility
Notts £4.4m Buildings costs and vehicle costs for 25 years.
W Yorks £4m Wakefield and Leeds District Headquarters and the Force Training School at Carr Gate
Suffolk £3.8m Police Investigation Centres at Martlesham, Bury St Edmunds and Gt Yarmouth.
Derbyshire £3.6m Divisional HQ in Derby and Ilkeston Police Station.
Glos £3.5m HQ and firearms centre.
Wilts £3.4m Gablecross Police Station, Swindon.
N Wales £2.9m St Asaph Divisional Headquarters and Custody Suite.
TVP £1.8m Headquarters.
Cumbria £1.2m Workington Police Station.
Gwent £941k Ystrad Mynach Police Station.
Durham £384k Urlay Nook tactical training centre.
Total £135.3m (all info provided by forces/PCCs under FOI)
Govt grant £73m  

 

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